The feds artificial support level for the markets

Discussion in 'Trading' started by kingtrade, Jan 14, 2022.

  1. kingtrade

    kingtrade

    The fed gave the markets an artificial support level which was historically low interest rates. If you think of the 200 day moving average on a stock that bounces every time it hits it, thats kind if what low rates were serving as ( an imaginary level of support). Every time the markets fell, they would hit an imaginary level of support ( artificially low rates ) and then they would bounce each and every time. Well, that imaginary line of support is gone.
     

  2. But what if everyone still believes that and buys it anyways? Good for at least one more pop right? :)
     
  3. The stock market isn't going down in a big way (>25%) until the next recession happens.

    Now the next recession could be sooner or later, nobody knows when. Perhaps if the Fed being so far behind the curve have to jack up rates higher than they would like, and that causes a recession.

    Still even if that doesn't happen we could still get something like a 20% correction to shake out the weak hands.
     
    Last edited: Jan 14, 2022
    zghorner, ElCubano and KCalhoun like this.
  4. smallfil

    smallfil

    What is holding the stockmarket up is the Federal Reserve holding off on raising interest rates. Indexes having difficulty going higher. Inflation is real and with cost of food and gas prices going higher, there will be less and less disposal income for leisure. US companies balance sheets are going to take a beating because the US consumer is close to tapped out with all these high prices. Unless, it is a necessity, food, utilities, rent, gas, medications, medical treatment----there will be little left to spend on other things.